Question

Joe is a graduate student who works as a resident adviser (RA) in the college dormitory. As compensation for serving as an RA, he is not charged the $2,200 other students pay for their dormitory rooms for the fall 2014 semester. As an RA, he is required to live in the dormitory. He is also paid $1,500 for being available to dormitory residents at all hours during the fall semester. Joe also has a scholarship that pays him $12,000 to be used for his tuition for the academic year. He uses the scholarship proceeds to pay $6,000 of tuition in August 2014. In January 2015, he pays $ 6,000 for his spring semester tuition. What is Joe's gross income for 2014?

Answer 1

Joe's gross income for 2014 includes his RA compensation ($2,200 for the dormitory room plus $1,500 for his duties) totaling $3,700. Scholarships used for tuition are not considered in this gross income calculation.

Step-by-step explanation:

The student's question is concerning the calculation of gross income for Joe in the year 2014, taking into account his compensation as a resident adviser and his scholarship for tuition. Gross income generally includes all incomings before taxes and deductions. Given the information, Joe's gross income for 2014 would include the compensation value of the dormitory room he is provided ($2,200) and the payment for his RA duties ($1,500). Scholarships that are used directly for tuition and related expenses are typically excluded from taxable income. Therefore, the $6,000 paid in August 2014 and for the spring semester in January 2015 are not considered as gross income for this purpose.

The gross income for Joe in 2014 would thus be the sum of $2,200 and $1,500, which is equal to $3,700.